Retained EU law in the EU (Withdrawal) Bill: A Reaction to the House of Lords Constitution Committee Report

On 29 January the House of Lords Constitution Committee delivered a withering assessment of the EU (Withdrawal) Bill, describing it as ‘fundamentally flawed from a constitutional perspective in multiple ways’. Alongside trenchant criticisms of the delegated powers in the Bill, and the effects for the devolution settlement, the Committee’s Report focuses on the definition and status of ‘retained EU law’.

The aim of this short post is to explore some of the implications of the Committee’s approach to this vexed question. If, as the Committee recommends, ‘retained EU law’ is defined narrowly, it will have the virtue of restricting the scope of the Henry VIII Henpowers in clause 7, which only apply to operational problems and deficiencies in relation to ‘retained EU law’. But a narrow definition gives rise to problems elsewhere. ‘Retained EU law’ is also the definition used for the purpose of the continuing application of existing CJEU case law and retained general principles of EU law under clause 6. Questions as to the validity, meaning and effect of pre-Brexit UK law which is not ‘retained EU law’ are therefore excluded from these interpretative provisions. In the Bill as worded, it is not clear if this difficulty is resolved by the operation of the principle of supremacy of EU law referred to in clause 5, the meaning and effect of which is very opaque. The Committee recommends that the principle of the supremacy of EU law be abandoned altogether; but if its approach were to be followed, there would be no EU principles which would apply to any law currently in the field of EU law which is not ‘retained EU law’. The implications are assessed by reference to the Equality Act 2010 (EqA).

The definition of retained EU law

As currently drafted, clause 6(7) of the EU (Withdrawal) Bill defines ‘retained EU law’, in broad terms, as a mixture of (i) EU-derived domestic legislation (clause 2), (ii) direct EU legislation (clause 3), and (iii) directly effective EU law rights (clause 4), in each case as interpreted by the CJEU. ‘Retained EU law’ is then subject to the case-law of the CJEU, as provided in clause 6. It is also subject to the Henry VIII powers in clause 7. This dual function generates problems, highlighted by the Committee’s treatment of each category.

Clause 2: EU-derived legislation

The definition of ‘EU-derived domestic legislation’ in clause 2 of the Bill is currently wide, including not only regulations made under the European Communities Act (ECA) but also other secondary or primary legislation which implements or ‘relates to’ the EU or EEA. In the employment sphere, for example, it would capture the EqA, which implements numerous Directives on discrimination (and Articles of the TFEU, such as Article 157) as well as regulations such as the Part-Time Workers (Prevention of Less Favourable Treatment) Regulations 2000 (PTW), implementing Directive 97/81/EC but made under s.19 of the Employment Relations Act 1999 instead of the ECA 1972. The intention of clause 2, according to the Explanatory Notes, is to preserve laws which would otherwise lapse on repeal of the ECA and to enable amendment of such legislation to ensure it functions properly after Brexit (EN para. 75). The result is achieved by making all such laws part of ‘retained EU law’.

The House of Lords Committee considers the category of EU-derived domestic legislation is too wide. First, it is unnecessary that it should include legislation which would continue in force in domestic law anyway, regardless of the repeal of the ECA (para. 21, referring to its Interim Report para. 25). Second, it is constitutionally inappropriate that primary legislation, the status of which is unaffected by Brexit, should become subject to the wide powers of amendment in clause 7 (para. 22). These different justifications produce different outcomes: according to the first, primary legislation together with secondary legislation not made under the ECA would fall outside the definition; according to the second, only primary would.

But both routes create the same problems. First, some technical amendments may be necessary to primary legislation (or secondary legislation not passed under the ECA) once the UK ceases to be a member of the EU; but if such law is no longer ‘EU retained law’ clause 7 will not bite on it at all. A second and more serious problem is that if you exclude legislation such as the EqA from the category of ‘retained EU law’, it will no longer be subject to the duties of interpretation in accordance with rulings of the CJEU by virtue of clause 6. Probably the most significant is the Marleasing duty, under which courts are to interpret domestic law ‘as far as possible’ in order to achieve the result required by EU law rules and principles, and which has led to a ‘broad and far reaching’ interpretative duty in domestic law, enabling the courts to depart from the literal meaning of a statute or imply words where necessary (see the authoritative guidelines in Vodafone No. 2 [2010] Ch 77, endorsed by the Supreme Court in Robertson v Swift [2014] UKSC 50 at para. 21).

There are many example in the case-law of how pre-Brexit rulings of the CJEU, coupled with the domestic courts’ radical interpretation of the Marleasing duty, have informed the construction of the EqA: see e.g. Rowstock v Jessemey [2004] ICR 185 (EqA interpreted to protect against post-employment victimisation in line with Case 185/97, Coote). Indeed, this approach has become so commonplace that it is increasingly unclear which interpretations of the EqA owe their effect to CJEU decisions and which do not. Ordinary domestic rules of interpretation, even based on the assumption that the implementing legislation was ‘intended’ to give effect to EU law, will not stretch so far as the Marleasing duty (see, for example, the Court of Appeal in Lock v British Gas [2017] ICR 1).

But if clause 6 no longer applies to the legislation post-Brexit, the most obvious means of preserving existing interpretations based on the Marleasing duty is lost. One potential solution to this conundrum would be to interpret the EqA in accordance with case-law of the CJEU not by virtue of clause 6, but on the basis of the principle of supremacy in clause 5. But this clause, as we shall see below, is even more obscure in its meaning and effects.

Clause 4: Direct and directly effective EU law.

The definition of ‘retained EU law’ also includes ‘direct EU legislation’ in clause 3 and certain categories of directly effective EU law, referred to in clause 4. The Committee’s Report highlights the complexity of the relationship between the law retained by virtue of clauses 2 and 3 (para. 25), and the uncertain status of Directives under the Bill (paras 32-35). There are, in addition, problems with clause 4. The Committee is correct to highlight the fact that many EU law rights (for example those relating to the internal market and citizenship) are reciprocal in nature, and that they might make little, if any, sense post-Brexit (para. 27). The fate of these reciprocal EU law rights depends on the withdrawal negotiations, whose outcome is, as things stand, not known. Further, there are express exclusions in the Bill. The Committee is surely correct to call for greater clarity in relation to the impact of the exclusion of the Charter of Fundamental Rights and Francovich damages.

Clause 5: the Supremacy of EU Law

Clause 5 states that the principle of the supremacy of EU law ‘does not apply to any enactment or rule of law passed or made after exit day’ (clause 5(1)), but that it ‘continues to apply…so far as relevant to the interpretation, disapplication or quashing of any enactment or rule of law passed or made before exit day’ (clause 5(2)).

The Committee finds that ‘the notion of maintaining the ‘supremacy principle’ following exit amounts to a fundamental flaw at the heart of the Bill’ (para. 89). The principle is said to be a ‘cumbersome’ device, ‘alien to the UK constitutional system’ (para. 91). It draws attention to three fundamental problems with clause 5: first, it is not clear to which categories of EU retained law it will apply (paras 81-83); second, it is unclear if it applies to the common law (paras 84-87); third, it is hard to see how the supremacy doctrine can apply once EU law is domesticated. The Committee’s solution is to dump the principle altogether. It argues that the intended effect of clause 5 can simply be achieved by treating ‘retained EU law’ as if it were domestic primary legislation enacted on exit day, so ensuring that under conventional UK constitutional law principles, it has priority over pre-exit domestic law (paras 92-98).

There is considerable force in the Committee’s approach. A key aim of Brexit is to turn what was EU law into domestic law, such that ‘the externally-derived constitutional doctrines of the EU’ (para. 99) indeed no longer seem apt. The Explanatory Notes, the House of Commons Briefing Paper on the Bill, and Mark Elliott, all state or assume that, in line with what the Committee recommends, the intention is to afford priority to ‘retained EU law’ over pre-exit UK law. But the Committee’s solution will generate other problems.

Back to the Drawing Board

Let’s go back to our example of the EqA. If it is not part of ‘retained EU law’ by virtue of clause 2, post-Brexit it will not be subject to clause 6, in tension with how it has been consistently interpreted up to now. At present, the Explanatory Notes suggest that the supremacy principle in clause 5(2) incorporates the Marleasing duty in relation to pre-exit provisions of domestic law (Explanatory Notes, para. 101). It is far from clear, to us at least, that clause 5 achieves this result: clause 5(2) is obscure in its wording, and it is clause 6, not clause 5, which seems to be specifically directed to the interpretation of domestic law. In this regard, the Committee’s criticisms of the uncertain scope of the principle of supremacy, and its lack of clarity as to which domestic law it applies, are well made.

But the Committee’s solution to this obscurity, that the supremacy principle is excised from domestic law, removes the only provision by means of which EU law could continue to bite on the EqA post-Brexit, were it to fall outside the definition of ‘retained EU law’. The result is that the EqA would stand entirely outside the Bill, generating precisely the legal uncertainty which the Committee wishes to avoid. Existing interpretations of the EqA, based on EU law, would be open to question to the extent they went beyond domestic rules of interpretation; and the effect of rulings of the CJEU would be equally unclear, since clause 6 would not apply at all. The EqA would stand in a kind of legal vacuum: up to now, it has consistently been interpreted to accord with the rulings of the CJEU and the general principles of EU law; post-Brexit it would just be domestic legislation, unaffected by EU law in any way. Freed from its historic moorings in EU law, the EqA would enter uncharted waters, as would any other domestic legislation which doesn’t fall within ‘retained EU law’.

These are not the only problems, of course. If the Charter is no longer ‘retained EU law’, it will no longer influence the way the Act is interpreted by the UK courts. But the fundamental problem is the dual function of the definition of ‘retained EU law’ in the Bill. The more that category is narrower than existing law which implements, forms part of or is in the field of EU law, the narrower is the scope of clause 6, and the greater the need for some other provision to govern the post-Brexit interpretation of legislation which, up to now, has been interpreted consistently in accordance with EU law.

The Committee is correct to find that the Bill as drafted ‘risks fundamentally undermining legal certainty’. Its response was to seek to clarify, and in important respects, to narrow, the scope of ‘retained EU law’. This response makes perfect sense from the perspective of limiting Ministerial powers under clause 7. But, as indicated above, it creates problems when you consider the effects of clauses 5 and 6, and in particular it generates precisely the legal uncertainty the Committee wishes to avoid. The better approach, we suggest, is to keep a wide meaning of ‘retained EU law’ for the purpose of clause 6; to give greater clarity as to how EU law principles including Marleasing will apply post-Brexit (rather than rely on an obscure reference to a ‘supremacy principle’ in clause 5); and to use a different definition of which law is subject to the Henry VIII powers in clause 7, or some other means of restricting the scope of those powers. The dog’s breakfast which is the current Bill won’t be transformed into a gourmet meal by the Committee’s approach.